How to Trade a Indices Trend Reversal

Indices Trend Reversal Trading Strategy

After stock indices price has moved in a certain direction for an extended period of time within a indices trend it reaches a point where it stops moving within the indices trend. When this happens we say that the indices trend line has been broken and this is interpreted as a indices trend reversal indices signal.

Since the indices trend line is the point of support or resistance and this point of support or resistance has been broken after a indices trend line break - then we expect the stock indices price to move towards the opposite direction and this is interpreted as a indices trend reversal indices signal.

When this happens indices traders will close the open stock indices orders which they had bought or sold. This is called taking profit.

Up indices trend Indices Trading Reversal

When stock indices price breaks below the upward indices trend line (support) the stock indices trading market will then move downwards

Indices Upward Indices Trend Line Break - How to Identify a Indices Trend Reversal Signal

This indices trend reversal trading signal is considered to be complete with the formation of a lower high of the indices price. This also provides a trading opportunity to sell once the indices trend line is broken -indices trading reversal signal.

Down indices trend Indices Trading Reversal

When stock indices price breaks above the downward line (resistance) the stock indices price will then move up

Indices Downward Indices Trend Line Break -How to Identify a Indices Trend Reversal Signal

This indices trend reversal stock indices signal is considered to be complete with the formation of a higher low. This stock indices reversal trading setup also provides a trading opportunity to open a buy indices trade once the indices trend line is broken -indices trend line reversal indices signal.

NB: Sometimes when stock indices price breaks its indices trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the stock indices trading market indices trend reverses.

To trade this indices trading reversal setup as a indices trader once you open a new indices trade in the direction of the indices trend reversal the stock indices price should immediately move in that direction, in a indices price breakout manner. This means that the stock indices prices should immediately move in that direction without much of a resistance.

If on the other hand the stock indices prices do not immediately move in the direction of the stock indices price breakout then it is best to close out the indices trade because it means that the indices trend is still holding.

Another tip is to wait for the indices trend line to be broken and for the stock indices trading market to close above or below it so as to confirm this indices trend reversal indices signal.

What happens is that most indices traders open trades waiting for a indices trading reversal even before the indices trend is broken, only for the stock indices price to touch this indices trend line and for the current market indices trend direction to hold and indices to continue with the current market trend.

Therefore, when trading this indices trading reversal setup it is best to wait until the stock indices price breakout has been confirmed by stock indices price closing above or below the indices trend line, depending on the direction of the stock indices trading market.

• Upward Market Indices Trend Direction Reversal - this reversal stock indices signal is confirmed once the stock indices price closes below this upward indices trend line, this should be the correct time to open a sell indices trade, so as to avoid a indices trading whipsaw.

• Downward Market Indices Trend Direction Reversal - this reversal stock indices signal is confirmed once the stock indices price closes above the downward indices trend line, this should be the correct time to open a buy indices trade, so as to avoid a indices trading whipsaw.